Setabay Private Money Lender

Saturday, August 11, 2018

Why Choose Owner Occupied Hard Money Loans

There are a lot of reasons why a consumer is unable to qualify for a residential mortgage. But owner occupied hard money loans offer them a great option.

There can be a great many reasons for a traditional lender such as a bank or credit union to deny a loan application. And after that happens many potential homeowners simply give up on their dream of homeownership. But what they don’t understand is that there is a non-traditional option available that might be a perfect fit for their lending needs. Owner occupied hard money loans are great for consumers who have certain financial issues which are precluding them from using a traditional loan.

Poor credit can be the result of many different issues. Sometimes it is simply due to poor financial choices but on other occasions, it is not due to a consumer’s mistakes. The loss of a major income is sometimes unforeseeable and can result in falling behind in household expenses. An accident or sudden illness can also be to blame as the consumer is buried under huge medical bills and is unable to make the required payments. Other times financial issues arise after a death in the family or divorce, but in all of these cases, the consumer’s credit becomes so bad that it is not possible to obtain a home loan even after years of work to correct credit issue. But hard money is an option for someone who is recovering from credit issues.

Another common issue for would be home buyers is erratic or short employment history. Banks want to see a long employment history and at least two years with the current employer. But not everyone works in an industry where that is possible. And who wouldn’t leave a job for better pay and benefits, just to maintain a longer work history to get a mortgage? That seems counterintuitive because the higher paying job would make it easier to pay a mortgage. But this can happen and a bank will deny a loan application. The solution for these borrowers is to seek owner occupied hard money loans.

The Self-Employment Drawback

Owning your own business is part of the American Dream. You work hard and achieve your goals as you create a business and even provide more jobs for hardworking people in your area. But banks are not fond of loan applications from the self-employed. Instead of just scrutinizing your personal financials now the bank wants to examine your business financials as well. And if you are not making a ton of money they are going to consider you a poor risk and deny your loan request. Again, the solution is simple, hard money.

Hard Money Offers Great Opportunities for Many

There are a lot of hardworking people out there who are reliable and can afford to pay a mortgage. But if they don’t fit into the bank’s idea of a perfect borrower, they are not going to get funding on a traditional loan. But owner occupied hard money loans are the perfect solution for those who are outside the box but still responsible and successful.

Happy senior business man making his notes at work Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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Friday, August 10, 2018

Guide to Successfully Selecting a Hard Money Lender

Not everyone can qualify for a traditional home loan. But in some cases, hard money loans can be a solution for a new home purchase.

Not everyone can meet the standards of a traditional bank mortgage. The reason for the application denial can range from past credit issues to not enough time at your current employer. But if you are determined to purchase a new home and are willing to make a good-sized down payment, then hard money loans can make your dream come true.

Before jumping into hard money, you need to understand that these are loans funded by a private individual or a small group. And also know that the documents that you will sign for a hard money loan are as legally binding as any loan documents from a bank. The main difference in hard money loans and traditional loans is that the hard money lender is interested in the current market value of the property more than the borrower’s creditworthiness. The property is being used as collateral, so the lenders need to know that if the borrower default then he or she can sell the property to recover the initial investment.

Because the collateral is the lender’s safety net, he or she must be certain that the property always holds some equity. This is where your sizeable down payment comes into play. The lender will only loan up to about 70% of the cost of the property and you must pay for the other 30%. This creates that instant equity and makes the lender feel more secure about loaning you the money.

Good Will Is Not Free

The other important piece of information about hard money is that it is more costly to use than money from a traditional loan. The increased risk factor means that the lender is going to want to increase his or her earnings on the loan. In most cases, a borrower can expect to pay 10% to 15% roughly interest on hard money loans. In addition, there can be points and other fees for processing and funding the loan. But the benefit of the higher cost is that those with bad credit can get a loan.

Smart Uses Of Hard Money

Loans on hard money are for a shorter term than traditional loans and most people can’t pay off a mortgage in three to five years. But these non-traditional loans serve as a short-term solution while borrowers improve credit or establish a stronger employment history. Once that is accomplished, most borrowers refinance to a traditional loan after the term of the hard money is over. Non-traditional loans are also good for borrowers who are self-employed and need a few years to get their business established and profitable so as to qualify for a traditional loan. Short term hard money loans are not the perfect solution or even a solution for every borrower. But there are some specific cases where using hard money is the best solution for meeting your long-term goals.

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Thursday, August 9, 2018

What are the Differences between Private Money (Hard Money Loans) and a Bank?

As an investor, why would you consider Hard Money Loans instead of a conventional bank loan? Take a look at the reasons why many a real estate investor is using this type of funding.

You finally narrow down the property that you want to invest in. You make an offer and it is accepted. Now, time is of the essence and you need to secure financing quickly. You contact your local bank and find out that the time to close a loan is 30 to 60 days at best. Not to mention the loads of paper work that you must produce in order to support the loan. Hard money loans can move quickly, in some cases it can take as little as 3 days to get funded.

Another advantage to hard money lenders is that they are not concerned with the borrower’s credit history or income, but rather the equity in the project itself. If you have had a challenged background, bankruptcies, or tax liens which would get you turned down by a conventional lender, you may very well get financing through a hard money lender.

If you are a new investor or a seasoned pro, the benefits of hard money loans include the speed to funding, low documentation, and not looking at a borrower’s past credit history. The lender will want to know how the loan will be repaid because they prefer not to get the property back. This finance option provides the borrower with speed of transaction, less paper work, and the ability to do multiple projects.

Hard Money Loans vs Traditional Bank Loans: The Difference Between the Two

· Delivery of funds and fast approval – An experienced hard money lender can approve your loan in hours and fund your project in as little as 3-5 days. The typical time for banks is 30 to 60 days.

· Equity and not credit or income is needed for approval – Regardless of your past credit history, your project funds will be based on 70 to 90% of the equity in your investment property.

· Terms are short – These types of loans run shorter than conventional banks. Residential loans can run from 6 months to 1 year while commercial loans can run up to 5 years.

· Interest rates are higher – Unlike traditional bank loans, hard money lender’s interest rates run from 7.5% to 15%. This depends on the term, loan to value ratio, and the location of the property.

· Paperwork is less than traditional banks- Hard money lenders are funded by private lenders, and the loan is based on the equity of the property. This results in less paperwork than traditional bank loans.

· Distressed or below market property financing – These types of loans are in high use for investors looking to fix and flip distressed properties or below market-value investments.

While many hard money lenders are reputable, as with any industry, not all companies are created equal. As an investor, you will need to do your homework and research each company that you are thinking about doing business with.

You will want to find a lender who has experience, a good reputation, and is licensed. Take careful notes of those lenders who are honest and upfront about the costs and interest rates. At Level 4 Funding, we work with hundreds of private investors whose reputations are solid. We guarantee the lowest possible rates and often approve loans within 24 hours. Call us for a no-obligation quote.

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Guide to Successfully Selecting a Hard Money Lender

Selecting a hard money lender is not as simple as driving to your local bank. But using a few tips you can make a great selection who will meet your hard money needs.

The total cost of borrowing is certainly one of the largest factors to consider when evaluating lenders of any type. You are trying to secure the best interest rate as well as the overall terms that best meet your needs because no one ever wants to waste money. So, when seeking a traditional loan, you really focus your scrutiny on the rates and terms of the proposed loan. But when you enter into the world of hard money, there can be several factors which should be scrutinized with equal intensity.

The reputation and legitimacy of a hard money lender is a critical factor in your selection process. Unfortunately, there are some unsavory characters who choose to portray themselves as hard money lenders simply for the purpose of scamming potential borrowers. So, a good first step in your investigative process is being certain that your potential lender is licensed, bonded and insured. This provides you with peace of mind when you consider divulging personal and financial information to a hard money lender. You can also look into the lender’s past history by speaking to references provided to you by your lender.

You will also want to pay particular attention to the terms that each lender is offering. Unlike with traditional bank loans which are highly structured and dictated by the lender’s policies, hard money lenders have the ability to be quite flexible on the terms that they offer or the terms that you counter offer and they accept. Knowing that you have this unique flexibility can be a big help as you begin to compare the offers from a variety of lenders. This flexibility can cover things like the length of the loan, the fee structure, and even if an early payoff will be accepted without a penalty. Over the lifetime of a loan, these terms all have the potential to save you money.

Look Local

If you are new to the world of hard money lending, then you are likely to have a great many questions about the process in general and the terms and documentation for your specific loan. Selecting a local hard money lender is a smart way to reduce your stress as you complete this new and important step in your financial future. Face to face meeting and an in-person loan signing can be a big help in creating a comfort and confidence level that lets you know you are making a great decision.

Be Honest and Forthcoming

There is no reason to be uneasy about the process of borrowing from hard money lenders. Any legitimate lender is going to welcome your questions in an effort to increase your comfort level and ensure the success of your loan. Explain your situation, ask for guidance and some education on the process and know that you are making a wise financial decision.

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Tuesday, August 7, 2018

Structure Loans with the Help of Hard Money Lenders

If you are having hard financial times and want to invest in a real estate project, then hard money lenders might be for you. Here’s what you need to know when you decide to proceed with this type of lender.

Working outside the traditional lending industry is a hard money broker. This broker has a pool of money that he wants to earn a higher than normal interest rate return on the money. The lending decision will be based on the preference for risk and the ability to do the loan. If the people have poor credit or their debt ratios are high, they can still secure a hard money loan.

Compared to conventional banks, loans from hard money lenders often come with higher than normal interest rates. These rates can run anywhere from 7 to 15 percent. Investors often use this type of loans as it is easy to qualify for and provides quick funding. In addition, brokers such as those at Level 4 Funding have put together a large rolodex of private investors that specialize in various types of real estate investments. These include numerous types of properties such as single family and multi-family units, offices, retail space, hospitality sites, storage facilities, assisted living communities, mixed-use buildings and warehouses.

When making payments, hard money lenders may charge you interest only. In these circumstances, the payment on the principal will be deferred until you flip the investment. This will give you a lot of flexibility.

End of Loan Balloon Payment

If your loan is setup as an interest only loan that means that at the maturity of the loan, in most cases 12 months or less, you will be faced with a balloon payment. If you were planning on refinancing, selling the property or paying it off, you will have to do this at the same time with the maturity of the loan. This illustrates the importance of planning before you become an investor in real estate.

With the proper forecasting, you can avoid penalties and proceed with confidence.

Before you proceed and begin your project, you will need to forecast your cash needs and cash flow. If you get into a tight cash position, and if you are late on a payment to hard money lenders, you may be hit with a very stiff late fees. It’s also important to be aware that a number of loans carry pre-payment penalties. This means that if you come up with a windfall and are able to prepay your loan, you’ve agreed that the lender can penalize you for early payment and not paying the loan for the entire term. Lenders often try to squeeze all the money they can out of a loan. So, before you sign on the dotted line, make sure you understand every item on the term sheet. Consider bringing it to your attorney and letting them review it before you proceed.

And always work with good-standing firms. At Level 4 Funding we understand that your success is our success. We do not charge pre-payment penalties and offer residential terms as low as 7.99% APR with commercial terms starting at LIBOR+350. Call us today for a no-obligation quote.

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What You Should Know About Owner Occupied Hard Money Loans

Hard money loans are also known as private money loans. Most investors prefer the favorable terms and ultra-low rates of conventional financing, but there are certain situations when owner occupied hard money loans can help you achieve your dreams.

If you cannot qualify for a conventional loan and you have a down payment of 30-40%, you may have a short-term solution, a hard money loan to assist you in acquiring a new home. Keep in mind that owner occupied hard money loans are usually easier to obtain than conventional loans. Most loans were equity based until 2008. At the time, if your loan to value (LTV) was 60% or less, a commitment would be issued without the lender considering if the borrower could repay the loan.

In today’s environment, the lender must confirm the ability of the borrower to repay the loan. This is tied to Dodd Frank law and a host of other regulations. On the other hand, owner occupied hard money loans can usually be obtained with a 30% down payment. The lenders may cut back the LTV to 50-60% for less desirable or rural areas. Keep in mind that a definitive exit strategy is needed by borrowers if they use hard money lenders.

If you have had a foreclosure or a short sale in the last 2-3 years, a hard money loan may be your answer to needed capital. Conventional loans require that you allow 3 years to pass before applying for a new conventional loan. If you are considering using a hard money lender you need to have an exit strategy to exit from the hard money loan. One exit strategy is paying off the hard money loan once your first home sells.

No Need for Sourced or Seasoned Funds for the Down Payment

There are very strict laws when a borrower is applying for a conventional loan. The lender in a conventional loan needs to know where the funds are coming from and how long the funds have been in the accounts. A hard money lender is more concerned with the equity position in the property and the borrower’s ability to repay rather than where the down payment funds come from. With a hard money lender, you can use funds from a business account or a family member.

Some hard money lenders require the following when obtaining owner occupied hard money loans:

· A signed Loan application

· Recent credit report

· A signed borrower authorization

· Credit authorization

· Consumer loan disclosures

· A purchase agreement for the property you wish to purchase

· Title report

· Evidence of escrow

· Proof of funds 30-40%

· Vesting

· W-2

· Pay Stub

· Down Payment proof of funds

If you have two properties, hard money lenders can make loans on both properties.

A “blanket loan” can be issued if the buyer has substantial equity in the selling property which is listed for sale with the new property. The properties will be “cross collateralized” which includes utilizing the vacating property and the new purchase. In real estate circles, this type of loan is considered a cross-collateralized owner-occupied bridge loan.

At Level 4 Funding, we make it a point to help you through the process of obtaining hard money loans without the need for mounds of paperwork. Three simple steps can set you up for success: a purchase contract, loan application and a written approval. We do not require tax returns, pay stubs or credit checks and there are no upfront or junk fees. Call us today for a no-obligation quote.

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Monday, August 6, 2018

How To Benefit From Owner Occupied Hard Money Loans

Many consumers are unaware of owner occupied hard money loans. But these non-traditional loans can offer certain borrowers some great opportunities.

There are many reasons that a consumer seeks to borrow money from a non-traditional lender. In most cases, the hard money becomes an option when the borrower has bad credit, has a very hard to verify income or irregular income or the property is in disrepair or has other types of issues. All of these complications make it impossible to secure a loan from a traditional lender such as a bank or credit union but owner occupied hard money loans can meet the needs of these consumers.

Bad credit can be the result of one’s own financial mistakes or they can happen after the loss of employment or even a medical issue that resulted in huge bills, but the result is always the same. The consumer is not able to secure a traditional loan for many years Even after correcting his or her credit issues and creating a nice savings for a down payment, it can be impossible to get a mortgage from a bank. But owner occupied hard money loans are the solution for these potential homeowners.

These hard money loans can be used for the initial purchase of a home, to refinance an existing loan, debt consolidation or even to make repairs or remodel a home. The only prerequisites are that the borrower be living in the home which is the collateral for the loan and that the value of the home meets the lender’s criteria for loan to value ratio. This means that the amount of the loan being requested should be about 80% of the current market value of the property or less.

Common Terms of Owner Occupied Hard Money Loans

When purchasing a property, most hard money loans require a 30% down payment but in the case of an owner occupied property, the down payment can be as little as 20%. In the case of refinancing a loan, the hard money maximum is normally about 65% of the current market value of the property. But if the borrower owns a second property and holds the deed, then that free and clear property can be used as additional collateral on the hard money loan which can be up to 100% of the purchase price.

Interest Rates for Hard Money

Hard money loans are considered non-traditional because the approval of the loan is based on the value of the property and not based on the borrower’s creditworthiness or income. This means that the lender is willing to assume a greater risk when funding the loan and as a result of this increased risk of default, the lender is going to require a higher interest rate than a traditional bank. Currently, on hard money loans with a loan to value ratio of 70 to 80%, the interest rates range from 11.99% to upwards of 14.99%. In addition, loan origination fees can be anywhere from two to six points. While the cost of using hard money is certainly greater than the cost of a traditional loan, hard money is a great solution for someone trying to rebuild credit or establish a credit history.

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